Blog Dedication

Thursday, May 10, 2007

Risk vs. Reward (vs. reality)

In a good "reality check" post, Lewis Green cites, "This just in from "The Pew Internet & American Life Project" of people's "evolving relationships to cyberspace. Pew found that 73 percent of U.S. adults own a cell phone, 68 percent have a desktop computer, 30 percent possess a laptop, and 73 percent connect to the Internet."

But Lewis also cited this stat..."Only 8 percent of U.S. adults are "deep users" of Web 2.0 features, using them to express themselves publicly."

There is much good discussion on these numbers and their impact over here. But right here I'd sure like to know: in selling/evangelizing/promoting--or just plain arguing--that your companies and clients should start using social media tools, are you guys using only a reward argument...or also one of lowering risk?

Sure, I prefer using the benefit (reward) argument over the fear (risk) play but I'm providing both to clients. Otherwise I fear I'm doing them--and this medium--a disservice. While the benefits clearly span interaction, relevance, authenticity, awareness and more, the risk argument goes like so:

Why risk happy customers? Web 2.0 tech should never be viewed as only a promotional outlet, but as an ongoing customer feedback (and customer research) loop. For both existing and planned offerings. If we miss out on it being a feedback mechanism then, I fear, we miss the Web 2.0 boat--and its main purpose of connecting we marketers with our markets.

Why risk market share? We also need to experiment (read: innovate) or else we run the risk of losing our competitive advantage. Innovating means trying new things, strategies, tools, programs, products and services (as well as improving on old ones).

Why risk budget? While we can account for how well much of our marketing spend is spent we can't account for the efficacy of the entire spend. And 2.0 is far more cost-effective than other media. Even though other media has more eyeballs, why not apportion a % of the budget to social media so as to limit the risk of spending unwisely?

What say you? Or what do you say to your companies and clients? Are your arguments working...or do your companies and clients fear Web 2.0 is too risky? (perhaps turn the risk argument around to work in your favor.)

About risk and market shares, I use the "innovate or die" trick :) Basically, marketing has to follow the zeitgeist. Proven methods might soon become obsolete. Experimenting new forms of marketing is part of the R&D budget of a healthy company. But in that case, R&D budget can have immediate impact. What a luxury!

I also usually say to my customers that they have an opportunity to make their own best practice rules. I saw a McDonald study lately showing that a good analysis of the online campaigns helped them to double the ROI of their online actions. After one year of finetuning, online became the most profitable medium for them.

I also return the question: what is the risk if you don't innovate while your competitors are?

Of course, marketing 2.0 is not mandatory per se. I has to be aligned and monitored based on marketing objectives. And the type of actions that should be undertaken (blog, podcast, RSS, viral mkt, wiki,...) will be evaluated based on the objectives.

Great addition to the conversation. As always, CK, thank you for asking the right questions. I agree that we have to always tell our clients the upsides and downsides of anything we recommend. Otherwise, we are not doing our jobs, which is to advise and to offer solutions first, and then tools to achieve those solutions. My caveat about a cost-benefits analysis is always "just because a tool is cheap doesn't mean we should use it."

Thanks Phillipe. I'll check out your post in a moment and I appreciate how you say "marketing has to follow the zeitgeist." While the numbers in the Pew report reflect low adoption rates, I see the trend (or the spirit of the times) being dynamic, two-way communications and outlets for consumers to become participants.

Lew: Great discussion you started! Agreed we can't push our clients to media because it's cost-effective. But in decreasing fear, it helps to show low cost-of-entry. Either way, we've got a ways to go as the numbers show 2.0 is still very fringe.

I think Drew's article in MP Daily Fix touches on this point quite well.

In short, he argues that we're marketers, and we're good at what we do. So let us do our jobs. If we recommend something (Web 2.0), it's because we believe it's the right thing to do. In essence, we shouldn't even have to do much convincing at all. The results should speak for themselves.

But alas, it's hard for clients to accept this.

So I guess the next step would be to convince clients that we're actually *good* marketers, and that we know what we're doing in the first place.

That's a really good point Philippe. With that in mind, I think we need to ask clients what it is they're truly looking for.

Do they just want reach, frequency and ROI? Or, are they okay with simply involving customers in a conversation and getting their feedback?

I think it's almost flawed to try assigning metrics to these new practices. Clients often want a linear cause-and-effect summary. "We spent X dollars on this. It generated Y dollars in return."

But the "problem" with Web 2.0 is that it doesn't usually generate short-term results. It fosters commitment, passion and loyalty by listening and talking with customers, but it doesn't necessarily translate into immediate sales.

I think this all goes back to the issue of importance. Who's more important? The customers or the company? If your answer is "the customers," you shouldn't be so concerned with placing a dollar value on conversations.

I know this might be hard for clients to accept, but if they really want to benefit their customers (which in turn benefits the company) they probably need to stop worrying so much about specific metrics.

It's okay to operate with some imperfections. It keeps managers and employees on their toes, and makes them actually have to think a little harder (as well as keep innovating). If clients aren't prepared to take some chances and live without ALL the answers, maybe Web 2.0 isn't for them in the first place.